What was Netflix thinking?
It was as if the company had a death wish. First, it announced that subscribers could no longer get mailed DVDs and online streaming for one price. Going forward, for those who wanted both, subscription rates would be raised by as much as 60%.
Not surprising – at least to everybody else in the world other than Netflix – subscribers went bonkers.
Then, in the middle of this self-created firestorm, the company announced it was splitting itself in two, making the rental of DVDs one operation, and the online streaming of movies and television shows another separate operation. If you wanted both services you would have to deal with two different sites.
In other words, more money and more hassle.
Customers said, “See ya!”
Netflix lost around 800,000 subscribers and its stock price dropped like a rock. The decision to split up the company was eventually reversed, but at that point it was a case of too little too late.
Talk about a business and public relations nightmare…
And this was a company that had once been way ahead of the curve, seeing a good business in mailing out DVDs, when everybody seemed more than comfortable stopping in at their local video store. Few, back then, would have been able to envision that Netflix would ultimately put those local stores out of business, as well as bankrupt the once mighty Blockbuster video chain of stores.
So, really, how did they get this one so wrong?
It seems that once again they were trying to get out ahead of the curve, only this time they went speeding around that turn with such reckless disregard that they jumped the guard rail.
Apparently, Netflix sees ahead to the day when nobody will want actual DVDs anymore. Streaming is the future. They thought if they split off the DVD service and charged extra for it, few would care.
Also, they figured they could use the extra income of the price hike to buy more programs, which they would eventually make available to their streaming customers.
But that’s just it – at the moment there really aren’t that many movies available to streaming customers. DVDs are still relevant. The future isn’t here yet!
And, it was as if Netflix was saying to customers, we want you to pay for us to get some new movies, so we can buy them and some time later rent them back to you.
Really?
The decisions Netflix made might not have flown at any time, but they certainly weren’t going to fly at this particular time. Not when it seems recession is the new reality.
Any business today that doesn’t respect how carefully people are counting their pennies is more than likely to get slapped upside the head.
Just ask Netflix how much that slap can hurt.
When a client comes to us with a project, we start with looking at what their objectives are. After the information gathering stage is complete, we get together and let the words, images, and ideas flow. Our job at this point is to riff with reckless abandon — no editing allowed. When the creative dump has run it’s course, then we start sifting, sorting, combining, discarding, and finally, selecting.
